Hotze v. Burwell, No. 14–20039.

• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)
• Writing for the Court: E. GRADY JOLLY, Circuit Judge
• Citation: 784 F.3d 984
• Parties: Steven F. HOTZE, M.D.; Braidwood Management, Incorporated, Plaintiffs–Appellants v. Sylvia Mathews BURWELL, Secretary, Department of Health and Human Services; Jacob J. Lew, Secretary, Department of Treasury, Defendants–Appellees.
• Docket Number: No. 14–20039.
• Decision Date: 24 April 2015

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Steven F. HOTZE, M.D.; Braidwood Management, Incorporated, Plaintiffs–Appellants
v.
Sylvia Mathews BURWELL, Secretary, Department of Health and Human Services; Jacob J. Lew, Secretary, Department of Treasury, Defendants–Appellees.

No. 14–20039.

United States Court of Appeals, Fifth Circuit.

April 24, 2015.

784 F.3d 985

Andrew Layton Schlafly, Far Hills, NJ, for Plaintiffs–Appellants.

Alisa Beth Klein, Esq., Carol Federighi, Senior Litigation Counsel, Mark Bernard Stem, Esq., Washington, DC, for Defendants–Appellees.

John Allen Eidsmoe, Senior Counsel, Montgomery, AL, for Amicus Curiae Foundation for Moral Law.

Karen Bryant Tripp, Esq., Houston, TX, David P. Felsher, New York, N.Y., for Amici Curiae Citizens' Council for Health Freedom, Janis Chester, M.D., Mark Hauser, M.D. and Graham Spruiell, M.D.

Lawrence John Joseph, Washington, DC, for Amicus Curiae Association of American Physicians & Surgeons, Incorporated.

Gregory G. Katsas, Washington, DC, David Michael Morrell, Houston, TX, for Amici Curiae House Majority Leader Eric Cantor, House Majority Whip Kevin McCarthy and Judicial Education Project.

Andrew S. Oldham, Deputy General Counsel, Alex Potapov, Office of the Attorney General, Office of the Solicitor General, for Amici Curiae State of Texas, State of Alabama, State of Alaska, State of Arizona, State of Colorado, State of Florida, State of Georgia, State of Idaho, State of Indiana, State of Kansas, State of Louisiana, State of Michigan, State of Montana, State of Nebraska, State of North Dakota, State of Oklahoma, State of South Carolina, State of South Dakota, State of Utah and State of West Virginia.

Joseph Edward Schmitz, Schmitz & Socarras, L.L.P., Lean, VA, Paul D. Kamenar, Washington, DC, Jacki Pick, Irving, TX, for Amici Curiae U.S. Representative Trent Franks and U.S. Representative Michelle Bachmann, U.S. Representative Kerry L. Bentivolio, Marsha Blackburn, et al.

Joseph Edward Schmitz, Schmitz & Socarras, L.L.P., Lean, VA, Paul D. Kamenar, Washington, DC, Jacki Pick, Irving, TX, Lawrence John Joseph, Washington, DC, for Amicus Curiae U.S. Representative Joe Barton.

Lawrence John Joseph, Washington, DC, for Amici Curiae Senator John Cornyn, Senator Ted Cruz, Congressman Pete Sessions, U.S. Representative Robert Aderholt and et al.

Elizabeth Bonnie Wydra, Chief Counsel, Washington, DC, for Amici Curiae Congressman Sandy Levin, Ranking Member, House Ways & Means Committee and

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Senator Ron Wyden, Chair, Senate Finance Committee.

Appeal from the United States District Court for the Southern District of Texas.

Before KING, JOLLY, and COSTA, Circuit Judges.

Opinion

E. GRADY JOLLY, Circuit Judge:

This appeal presents an Origination Clause¹ challenge to two provisions of the Patient Protection and Affordable Care Act (ACA)—the “individual mandate,” which imposes a penalty on non-exempt individuals who lack qualifying health insurance; and the “employer mandate,” which imposes a tax on certain employers who fail to offer “affordable” health insurance to their employees and their employees' dependents. The plaintiffs are Steven F. Hotze, M.D., and Braidwood Management, Inc., Dr. Hotze's employer. The district court held that the ACA was enacted in conformance with the Origination Clause, and thus dismissed the plaintiffs' complaint on its merits. We never reach the merits, however, and find it unnecessary to address the arguments relating to the Origination Clause. Instead, we conclude that the district court lacked subject-matter jurisdiction to entertain the complaint, because Dr. Hotze failed adequately to allege an injury that would give him standing to challenge the individual mandate and because Braidwood's challenge to the employer mandate is barred by the Anti–Injunction Act (AIA), 26 U.S.C. § 7421(a), as a suit seeking to enjoin the collection of a federal tax. Accordingly, we VACATE the district court's judgment and REMAND this case with instructions to dismiss for lack of subject-matter jurisdiction.

I.

Below, we will initially sketch the legislation and legislative background that are the subject of this appeal. We will then refer to the Supreme Court's decision in National Federation of Independent Business v. Sebelius, –––U.S. ––––, 132 S.Ct. 2566, 183 L.Ed.2d 450 (2012) (NFIB ), and then to the particular facts before us, all before getting to the issues that finally decide this appeal.

A.

1.

In October 2009, the House of Representatives introduced H.R. 3590, called the “Service Members Home Ownership Tax Act of 2009” (SMHOTA). The SMHOTA spanned only a few pages and primarily related to extending home-ownership-related tax credits to members of the military. The House unanimously passed the SMHOTA the day after it was introduced, and the bill went to the Senate.

Once there, the Senate proposed Amendment No. 2786 to H.R. 3590. Amendment No. 2786 preserved H.R. 3590's bill number and its enacting clause, which read: “Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled.” Otherwise, the Senate struck the language of the SMHOTA in its entirety and substituted the language of the ACA. The ACA was more than 2,000 pages long and constituted a reform of the nation's health-insurance system that aimed to “achieve[ ] near universal coverage,” “strengthen[ ] the private employer-based health insurance system,” and “lower

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health insurance premiums.” 42 U.S.C. § 18091(2)(D), (F).

The Senate passed H.R. 3590 as amended and returned it to the House. No member of the House filed a “blue slip,” the mechanism generally used by members to object to bills raising Origination Clause problems. The House passed the ACA on March 21, 2010, and the President signed it into law two days later.

2.

The ACA is a “sweeping and comprehensive Act.” Florida v. U.S. Dep't of Health & Human Servs., 648 F.3d 1235, 1241 (11th Cir.2011). Most of its provisions are beyond the scope of this appeal. A brief overview of several of its provisions, however, will lend context to the appeal before us.

As mentioned, the ACA was designed both to “achieve[ ] near universal coverage” and lower the costs of that coverage. 42 U.S.C. § 18091(2)(D), (F). Congress pursued the first of these goals in part by barring some of the health-insurance industry's basic underwriting practices. For instance, the ACA's “guaranteed issue requirement” bars insurers from denying coverage to individuals with preexisting health conditions. Id. §§ 300gg–1(a), 300gg–3. Similarly, the “community rating requirement” bars insurers from charging higher rates to individuals based on medical history. Id. § 300gg(a)(1). Insofar as these practices “prevented individuals from obtaining and maintaining health insurance,” Thomas More Law Ctr. v. Obama, 651 F.3d 529, 536 (6th Cir.2011), they were antithetical to the ACA's goal of near-universal coverage.

Standing alone, however, these provisions aimed at increasing coverage most likely would have increased costs. That is because, by prohibiting these underwriting practices, Congress ran the risk that “many individuals would wait to purchase health insurance until they needed care,” which would drive up health-insurance premiums. See 42 U.S.C. § 18091(2)(I). The ACA attempts to address this “adverse selection” problem by “influenc[ing]” individuals who might otherwise forego health insurance—individuals who tend to be healthy and make fewer claims—to purchase it. NFIB, 132 S.Ct. at 2596 ; see also 42 U.S.C. § 18091(2)(I). One way in which it does this is by requiring most individuals either to obtain health insurance or pay a “penalty.” 26 U.S.C. § 5000A. Another is by requiring employers, under some circumstances, either to provide their employees with “affordable” health-insurance coverage or pay a “tax.” Id. § 4980H. It is these provisions—commonly referred to as the “individual mandate” and the “employer mandate,” respectively—that the plaintiffs challenge in this appeal.

3.

The individual mandate imposes a “penalty” on individuals who fail to obtain qualifying health insurance, termed “minimum essential coverage.” 26 U.S.C. § 5000A(a) -(b). The mandate exempts some individuals, including those with religious objections, undocumented aliens, and prisoners. Id. § 5000A(d). “Minimum essential coverage” is defined to include, among other things, coverage under an employer-sponsored plan, so long as the plan does not provide exclusively for excepted benefits, such as dental-only coverage. See id. § 5000A(f)(1)(B), (2)-(3).²

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The Secretary of the Treasury is directed to collect the individual-mandate penalty “in the same manner” as a tax, except that the Secretary may not enforce the penalty using criminal prosecutions, liens, or levies. Id. § 5000A(g).

The employer mandate requires “applicable large employer[s]” who fail to provide “affordable” health-insurance coverage to their employees to pay a “tax.” Id. § 4980H(a), (c)(7). An “applicable large employer”...